Which of the following is true about a Sweezy oligopoly?
A) The marginal cost function has a downward "jump" or "discontinuity."
B) The marginal revenue function has a downward "jump" or "discontinuity."
C) The marginal cost function has an upward "jump" or "discontinuity."
D) The marginal revenue function has an upward "jump" or "discontinuity."

Question

Quizplus · Accepted Answer

In a Sweezy oligopoly, firms face a kinked demand curve due to the assumption that competitors will match price decreases but not price increases. This leads to a marginal revenue curve that has a downward "jump" or "discontinuity" at the kink in the demand curve, reflecting the sudden change in the slope of the demand curve that firms face.

Which of the Following Is True About a Sweezy Oligopoly